Obama, Listen to Andrew Cuomo

Age, I’m happy to say, has a few benefits, one of which is the historical perspective that comes with it and helps put present-day challenges in their proper light. Like many of us, I remember watching the 1984 presidential debate when Walter Mondale, the Democrat challenger to Ronald Reagan that year, looked directly into the television camera and told the American people in no uncertain terms that he would raise their taxes if they put him in the White House.

Mondale thought of himself as a courageous statesman, a straight shooter in the mold of Harry Truman. But posterity has shown his “I will raise your taxes” promise for what it really was: a disastrous political blunder and an inept misreading of the wishes of the electorate that led — as it had to lead — to a devastating 49-state landslide defeat.

A generation has passed since Reagan trounced Mondale at the ballot box, but the lesson this election teaches is just as relevant today as it was then.

The American people continue to have little patience for politicians who shamelessly try to siphon off more and more of the public’s hard-earned money to fund grandiose, top-down schemes that inevitably reward powerful interest groups instead of bolstering the economy as a whole.

Notwithstanding this fundamental reality, which anyone with a political IQ above the Mondale level can seeplainly, there remains a persistent, "bull-in-a-china-shop" movement within the Democratic Party to raise taxes even though such action comes with great political risk, and President Barack Obama seems very much inclined to take this position himself.

Obama won't listen to John Boehner and Mitch McConnell, who keep saying that raising taxes in the middle of an economic recession would simply be disastrous. If he can't listen to Republicans, perhaps he might open his ears to Andrew Cuomo, the Democratic governor of New York who has closed a $10 billion budget deficit by absolutely opposing new taxes, even on the wealthiest New Yorkers.

Cuomo's popularity among Republicans and Democrats has skyrocketed, and New York is back on the map as a state businesses can flourish in.

We have seen flashes of similar pragmatism from Obama. In late 2010, he compromised and agreed to extend the Bush taxes cuts for two years.

The American people had just rejected the Democratic Party in resounding fashion — and to ignore that loud voice would have put Obama’s re-election prospects in great peril.

But that was then, this is now. As the election results of last year fade from our collective memory, the demands on Obama from within his own party to raise taxes on the wealthy (i.e., the strategy that helped him win the White House in 2008) grow louder. Class warfare by its nature is divisive, but it’s a political strategy that has, sadly, worked in the past.

Sensing their opportunity, the Democrats have, in the words of the biblical proverb, “returned like a dog to its vomit.” As part of the ongoing negotiations to raise the debt ceiling, they have floated a trial balloon that calls for increasing taxes on the wealthy to the tune of $600 billion to offset increased borrowing. Let’s hope this narrow-minded proposal goes nowhere and that the GOP has the backbone to oppose it.

With the economy in a condition as precarious as it has been since the Great Depression, it is simply madness to raise taxes at this time on any class of Americans — rich or poor. Ideally, taxes should be lowered.

A cursory glance at the relationship between the tax code (as represented by the top marginal income tax rate) and the health of the economy (as represented by the Dow Jones index) shows that the two are highly correlated. If one is lowered, the other will have a tendency to rise, everything else being equal.

As the following table shows, the staggering economic growth of the United States over the past 60 years has occurred during a period when the top income tax rate has trended steadily downward decade after decade.

Top Income Tax Rate

(Yearly Avg.)

Dow Jones

(End of Decade)

1950s

91.2%

595

1960s

78.4%

794

1970s

70.0%

969

1980s

44.3%

2,560

1990s

37.9%

10,374

2000s

35.6%

11,256

It wasn’t an accident that the greatest economic boom in world history began with Ronald Reagan’s historic income tax cuts in the early 1980s. Neither was it a coincidence that the nation’s economy continued to expand outward like an unstoppable tide during the time his successors sat in the White House, as they were wise enough to continue his tax policy in a similar vein, albeit with a few bumps along the way.

It is notable that the Democrat Bill Clinton, who like Reagan had his finger on the pulse of the nation, refused to play the class warfare game and instead gave a green light to the nation’s business community in the 1990s, allowing them to innovate and grow at unprecedented levels. Clinton did raise some taxes modestly, but he cut the capital gain taxes dramatically. This in turn fostered prosperity and led to an environment where jobs were plentiful.

The question for President Obama really boils down to this: Will he take the path of Walter Mondale or Bill Clinton?

If he has any doubts about which direction he should go in the nation’s current condition, he need look no further than New York, where the maverick Democratic Gov. Cuomo has defied all expectations and is governing with a firm pledge that he will not raise taxes to address his state’s budget difficulties.

He may be the son of the iconic “tax and spend” liberal Mario Cuomo, who was governor of New York from 1983 to 1994, but he is forging a pragmatic pro-growth policy that will be a boon to New Yorkers for years to come.

Heckled by angry Democrats for failing to raise taxes, Cuomo has stood firm.

“I don’t believe in increasing taxes,” Cuomo said. “I believe it’s counterproductive for the state. I believe more people will leave the state and you’ll have less revenue. So, I think it actually hurts the economy of the state to raise taxes at this time. That’s what I believe."

Although Andrew Cuomo has been vilified by members of his party and media outlets such as The New York Times for his refusal to raise taxes, he has gained the overwhelming support of New Yorkers themselves. According to a Quinnipiac poll released in early June, they approve of his job performance by an astounding 61-to-18 percent margin.

President Obama and his fellow Democrats in Congress should pay attention to all of this because if the voters of New York, one of the most blue states in the nation, are repelled this much by higher taxes, how will the voters of swing states such as Ohio, Indiana, Florida, and North Carolina react to Democrats who promise to go in the opposite direction as Cuomo?

Fortunately for the country, refusing to give in to “tax-and-spend” demagoguery appears at this time not only to be good economics, but good politics, too, and that conjunction of elements can only help the United States in its hour of need — assuming, of course, that Obama and his Democratic colleagues refuse to follow in Mondale’s footsteps.

Age, I m happy to say, has a few benefits, one of which is the historical perspective that comes with it and helps put present-day challenges in their proper light.Like many of us, I remember watching the 1984 presidential debate when Walter Mondale, the Democrat challenger...